HOUSE OF REPRESENTATIVES FINAL BILL ANALYSIS BILL #: CS/CS/CS/HB 695 FINAL HOUSE FLOOR ACTION: SUBJECT/SHORT South Florida Regional 111 Y’s 6 N’s TITLE Transportation Authority SPONSOR(S): Government Accountability Committee; Transportation & Tourism Appropriations GOVERNOR’S Subcommittee; Transportation & Approved ACTION: Infrastructure Subcommittee; Santiago COMPANION CS/CS/SB 842 BILLS: SUMMARY ANALYSIS CS/CS/CS/HB 695 passed the House on April 28, 2017, and subsequently passed the Senate on May 1, 2017. The bill addresses insurance liability issues related to the South Florida Regional Transportation Authority (SFRTA), which operates commuter rail service in Palm Beach, Broward, and Miami-Dade Counties. The bill provides SFRTA with the ability to indemnify the Florida East Coast Railway (FECR) and All Aboard Florida (AAF) under certain circumstances. The bill provides who is responsible for property damage and injury to certain persons associated with several scenarios involving rail accidents. The bill also provides an allocation of risk between the parties and includes provisions for passengers and other rail corridor invitees. The bill authorizes SFRTA to purchase railroad liability insurance of $295 million per occurrence, and allows it to adjust the limit in accordance with applicable law. The bill also requires SFRTA to maintain a $5 million self- insurance retention account. The bill authorizes the Department of Transportation (DOT) to indemnify and insure certain rail services on DOT-owned rail corridors. The bill prohibits SFRTA from entering into a contract or other agreement, or renewing or extending any existing contract or other agreement, which may be funded, in whole or in part, with DOT provided funds without DOT’s prior review and written approval of SFRTA’s proposed expenditures. The bill further clarifies that those DOT funds constitute state financial assistance while outlining the parameters for advancing such funds and reimbursing SFRTA invoices. The bill is not expected to have a fiscal impact on state government. SFRTA may incur costs related to the purchase of liability insurance and the creation of a self-insurance retention fund. The bill was approved by the Governor on June 23, 2017, ch. 2017-138, L.O.F., and will become effective on July 1, 2017. This document does not reflect the intent or official position of the bill sponsor or House of Representatives. STORAGE NAME: h0695z1.TIS DATE: June 27, 2017 I. SUBSTANTIVE INFORMATION A. EFFECT OF CHANGES: Current Situation Commuter Rail in Florida In 1988, the Department of Transportation (DOT) and CSX Transportation, Inc., (CSX) entered into an agreement where DOT purchased approximately 81 miles of CSX track and right-of-way1 in order to operate commuter rail in South Florida.2 The commuter rail system (Tri-Rail) serves Miami-Dade, Broward, and Palm Beach counties.3 Pursuant to the agreement between DOT and CSX, the parties agreed to a no-fault allocation of liability. Specifically, CSX pays 100 percent of all freight damages, DOT pays 100 percent of all commuter rail damages, and both parties equally share the liability for third-party damages outside the corridor when both parties are involved.4 The agreement also required DOT to establish a $5 million self-insurance fund and to obtain $120 million of insurance, including punitive damage coverage.5 The Legislature authorized DOT to enter into the agreement through proviso language in the 1988 General Appropriations Act.6 While implementing the agreement, DOT realized that procuring the requisite insurance coverage posed some challenges. The Department of Management Services purchases insurance for state agencies.7 However, commuter rail liability insurance is a specialized offering available from relatively few insurance providers. In 1990, due to difficulties in obtaining this insurance domestically, the Legislature exempted the purchase of insurance for Tri-Rail, which is currently operated by the South Florida Regional Transportation Authority (SFRTA),8 from the statutory requirements for procuring insurance and contractual services.9 This allowed Tri-Rail to obtain insurance from international insurers. Subsequently, coverage was purchased from a variety of providers primarily located in London and Bermuda.10 Liability on Rail Corridors Commuter rail is defined as “a type of public transit that is characterized by passenger trains operating on railroad tracks and providing regional service.”11 Commuter rail operators often seek to use existing track or right-of-way, which is primarily owned by freight rail operators, due to the high cost of building new infrastructure.12 Consequently, commuter rail operators need to enter into agreements with the freight rail operators regarding how commuter rail operators will access the right-of-way. The most common challenge that occurs during negotiations between the commuter rail operator and the freight rail operator is determining liability.13 1 Commonly known as the South Florida Rail Corridor. Florida Department of Transportation, 2006 Florida Freight & Passenger Rail Plan, 2-1 n. 1, http://www.fdot.gov/rail/Publications/Plans/2006/flrail06.pdf. 2 Florida Department of Transportation, 2006 Florida Freight & Passenger Rail Plan, 5-34 http://www.fdot.gov/rail/Publications/Plans/2006/flrail06.pdf. 3 Tri-Rail, Destinations, http://www.tri-rail.com/destinations/broward-county/; Tri-Rail, Destinations, http://www.tri- rail.com/destinations/miami-dade-county/; Tri-Rail, Destinations, http://www.tri-rail.com/destinations/palm-beach-county/. 4 CSX Liability Issues. 5 CSX Liability Issues. 6 See Chapter 87-98, Laws of Fla. (proviso accompanying Specific Appropriation 1700B). 7 Section 287.022, F.S. 8 See Chapter 2003-159, Laws of Fla. 9 Chapter 90-136, s. 88, Laws of Fla. 10 CSX Liability Issues. 11 U.S. General Accounting Office, Commuter Rail: Information and Guidance Could Help Facilitate Commuter and Freight Rail Access Negotiations, Report GAO-04-240, at 5 (Jan. 2004), available at http://www.gao.gov/products/GAO-04-240 (last visited April 7, 2017). 12 Id. at 1. 13 Id. at 17. STORAGE NAME: h0695z1.doc PAGE: 2 DATE: June 27, 2017 Introducing commuter trains onto freight rail corridors inherently raises the freight operators’ risk of liability due to the increased number of persons and trains present within the rail corridor. Accordingly, most freight rail operators want the commuter rail operator to assume all risks associated with the presence of the commuter rail service. Freight rail operators refer to this as the “but for” argument – “but for the presence of the commuter rail service, the freight railroad would not be exposed to certain risks; therefore, the freight railroads should be held harmless.”14 South Florida Regional Transportation Authority (SFRTA) Power and Duties In January 1989, the Tri-Rail was established to provide commuter rail service along a 67-mile corridor between the West Palm Beach Station in Palm Beach County and the Hialeah Market Station in Miami- Dade County. Between 1997 and 1998, Tri-Rail service was extended to the Mangonia Park Station in Palm Beach County and to the Miami Airport Station in Miami-Dade County. In 2003, the Legislature created SFRTA, a tri-county federal public transit authority.15 The SFRTA Act defines terms related to SFRTA and expresses SFTRA’s power and duties.16 Included in its powers and duties are provisions allowing SFRTA to contract for the procurement of various goods and services.17 SFRTA operates Tri-Rail in South Florida.18 The purpose for creating SFRTA was to expand cooperation between Tri-Rail commuter rail services and county transit operators and planning agencies within Miami-Dade, Broward, and Palm Beach Counties. SFRTA has plans to extend Tri-Rail service to the MiamiCentral station, which will serve as downtown Miami’s multimodal hub.19 At MiamiCentral, Tri-Rail passengers will be able to connect to All Aboard Florida (AAF), the Miami-Dade County bus system, Metrorail, and Metromover.20 SFRTA Funding The statutory funding for SFRTA provides that effective July 1, 2010, until as provided below, DOT is required to annually transfer from the State Transportation Trust Fund (STTF) to SFRTA the following amounts:21 If SFRTA becomes responsible for maintaining and dispatching the South Florida Rail Corridor: o $15 million from the STTF to SFRTA for operations, maintenance, and dispatch; and o An amount no less than the work program commitments equal to $27.1 million for fiscal year 2010-2011, as of July 1, 2009, for operating assistance to the authority and corridor track maintenance and contract maintenance for the South Florida Rail Corridor. If SFRTA does not become responsible for maintaining and dispatching the South Florida Rail Corridor: o $13.3 million from the STTF to SFRTA for operations; and o An amount no less than the work program commitments equal to $17.3 million for fiscal year 2010-2011, as of July 1, 2009, for operating assistance to the authority. SFRTA is currently responsible for maintaining and dispatching on the South Florida Rail Corridor; therefore, the first funding scenario is in effect. Funding required by s. 348.58(4), F.S., may not be provided from the funds dedicated to the Florida Rail Enterprise.22 14 Id. at 18. 15 South Florida Regional Transportation Authority Act, Chapter 343, F.S. 16 Section 343.54, F.S. 17 Id. 18 South Florida Regional Transportation Authority Act, Chapter 343, F.S.; see also Tri-Rail, Destinations, http://www.tri- rail.com/destinations/broward-county/; Tri-Rail, Destinations, http://www.tri-rail.com/destinations/miami-dade-county/; Tri-Rail, Destinations, http://www.tri-rail.com/destinations/palm-beach-county/. 19 Tri-Rail, Tri-Rail Downtown Miami Link, http://tri-raildowntownmiamilink.com/ (Last visited April 10, 2017). 20 Id. 21 Section 343.58, F.S. 22 Funds are dedicated to the Florida Rail Enterprise pursuant to s. 201.15(4)(a)4., F.S. STORAGE NAME: h0695z1.doc PAGE: 3 DATE: June 27, 2017 SFRTA may not commit these DOT-provided funds without DOT approval, which may not be unreasonably withheld.